Financing Your Remodeling Projects
Awesome Financing Advice From A Window Replacement Guy?
I’m a windows and siding guy, what do I know about financing a remodeling project, right?
I know that if your remodeling project has to do only with windows and siding, my company will finance it. I know that for bigger projects you might want to get a mortgage.
I know too that some people have a hard time getting a mortgage or any kind of financing.
I know that everybody knows that.
What I know that might be different is this:
Banks have rules as to who they give a loan to. Sometimes, a person’s financial history fits what bank wants to see in a borrower but doesn’t fit what 37 other banks want to see. For that reason, I suggest you go to a mortgage broker.
They work with many lenders and will help you present yourself to one. Or tell you to go home and work on your financial self-portrait. That might mean that you need to save $2,700 more, pay off the Discover credit card, challenge some information on your credit report, or wait…
Whether you go to a mortgage broker or a bank, the process takes some time… About a month if you are in financial good shape… longer to much longer if you’re not. End of November is a good time to look into this if you’re looking to do any major remodeling next spring.
This November is an especially good time: mortgage rates are stupid low. I know, they used to be lower… they might get low again.
I don’t predict the future, but I remember. I remember that most of my life interest rates have been over 6%. This November, in the Chicago area, rates are at 4.5% if you have good credit (good credit scores, i.e., 720 and higher; no collections, bankruptcies, foreclosures, loan modifications, etc.), good (continuous) work history, and you borrow less than 80%.
(About rates, I’m assuming they’re the same for the whole country, but I’ve never checked. I know they’re not different for Des Plaines than they’re for Park Ridge or Elgin or Evanston. And that’s the extent of my knowledge of mortgage rates.)
I know that a lot of people are in la-la land when it comes to the value of their house and most are off by a bit (but enough that they do not qualify for the mortgage loan they want). A mortgage broker will take a look at the value of your home, get an appraiser to estimate it. But this you can do yourself too. You can, indeed, hire an appraiser… Which is for you only, the lender you or your broker choose will hire their own appraiser, who might strongly disagree with your appraiser or not.
You could do it yourself by looking the ‘find-my-home-value on www.redfin.com. Just delete the not-sold houses, and pick comparables that sold in the last 6 months and are close to your home.
Or you could ask a real estate agent for a comparative market analysis (costs less than an appraisal, is not as accurate, but might be just enough).
All those many words just to tell you to start early. You do need to start early. So, let’s join Nike and say, Just do it.
As to which projects are worth getting a mortgage over, I say, window replacement, siding replacement. Because Remodeling Magazine says they are (read my article about the Remodeling Magazine here). Kitchen and bathroom remodeling projects are good too, according to the same study.
Of course, your reason for remodeling might have nothing to do with increasing the resale value of your home and there I cannot help. Except to say that, if you need to finance the project, start looking into getting that financing months before you need it.
By the way, if you have issues with value, FHA has mortgage loans that base the loan amount on the value of your home after you’re done with the remodeling. FHA 203k is the name of the program. If you have an FHA mortgage already, you can do their 203K Streamline, which means, usually, they don’t even look at your income and credit or order an appraisal. But not always. So, talk to a mortgage broker or a loan officer.
Back to windows and siding. Visit http://ChicagoWindowsReplacement.info for more info.